Back to top

Image: Bigstock

Is Vanguard LifeStrategy Growth Fund (VASGX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Having trouble finding an Allocation Balanced fund? Vanguard LifeStrategy Growth Fund (VASGX - Free Report) is a potential starting point. VASGX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VASGX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VASGX. Vanguard LifeStrategy Growth Fund debuted in September of 1994. Since then, VASGX has accumulated assets of about $18.47 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 12.19%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 8.2%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. VASGX's standard deviation over the past three years is 15.08% compared to the category average of 16.57%. The fund's standard deviation over the past 5 years is 12.17% compared to the category average of 13.57%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.79, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VASGX has generated a negative alpha over the past five years of -0.7, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VASGX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 0.89%. Looking at the fund from a cost perspective, VASGX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.

Bottom Line

Overall, Vanguard LifeStrategy Growth Fund ( VASGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Your research on the Allocation Balanced segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Vanguard LifeStrategy Growth Inv (VASGX) - free report >>

Published in